SARGON E AWDISHO and MARINA I. AWDISHO

Dated: February 12, 2020 Denil 7 □□ 2 Daniel P. Collins, Bankruptcy Judge 3 UNITED STATES BANKRUPTCY COURT 4 DISTRICT OF ARIZONA 5 ||Inre ) Chapter 7 Proceedings © || SARGON E. AWDISHO and Case No: 2:14-bk-06594-DPC 7 || MARINA I. AWDISHO, ) ) ORDER RE MOTION TO REOPEN 8 Debtors. ) BANKRUPTCY CASE AND MOTION ) TOAVOID LIEN ON REAL 9 ) PROPERTY 10 [NOT FOR PUBLICATION] jp ff) 12 Debtors Sargon E. Awdisho and Marina I. Awdisho (“Debtors”), filed their 13 || Motion to Reopen Bankruptcy Case (“Motion to Reopen’’) on February 6, 2020 (DE 39) 14 || in order to proceed with their Motion to Avoid Lien on Real Property (“Motion to Avoid 15 || Lien”) (DE 34). 16 On May 2, 2014, Debtors filed their Chapter 7 bankruptcy petition (“Petition 17 || Date”). On the Petition Date, Debtors owned a residence for which they claimed an 18 ||exemption in these bankruptcy proceedings (DE 7). No timely objections were filed to 19 || their claimed homestead exemption. Prior to the Petition Date, Midland Funding, LLC 20 || (“Midland’’) recorded a judgment against Debtors in the office of the Maricopa County 21 ||Recorder. Midland failed to renew the judgment within the five-year period pursuant to 22 || A.R.S. § 33-964. However, in 2018, that statute was amended to extend the judgment 23 || renewal period to ten years. 24 Debtors obtained their discharge on September 18, 2014 (DE 31). Midland did 25 ||not obtain an order of this Court denying Debtors’ discharge or the dischargeability of 26 ||their claim. Debtors are now concerned Midland’s pre-petition judgment might be 1 renewed and may impair their homestead exemption. Therefore, Debtors seek an order 2 of this Court, pursuant to 11 U.S.C. § 522 (f), avoiding Midland’s judgment “lien.” 3 The Arizona Court of Appeals discussed the interplay of judgment liens and 4 homestead exemptions in Pacific Western Bank v. Castleton, 434 P.3d 1187 (Ariz.App. 5 Div. 1 2018). The Court first cited A.R.S. § 33-964(B) which states: Except as provided in § 33-1103, a recorded judgment shall [6] not become a lien on any homestead property. Any person 7 entitled to a homestead on real property as provided by law holds the homestead property free and clear of the judgment 8 lien. 9 A.R.S. § 33-964(B) (emphasis added). The Court then quoted A.R.S. § 33-964(A) (a 10 judgment ‘‘shall become a lien … on all real property of the judgment debtor except real 11 property exempt from execution, including homestead property’’). 12 The Court went on to hold that: 13 Section 33-964 thus establishes the general rule that a recorded judgment does not become a lien on homestead 14 property. See also Union Oil Co. of Ariz. v. Norton Morgan Commercial Co., 23 Ariz. 236, 245 , 202 P. 1077 (1922) [15] (holding that ‘‘no lien shall be permitted to attach to the real 16 property claimed as a homestead’’). As the statute states expressly, individuals hold their ‘‘homestead property free 17 and clear’’ of any judgment liens. See A.R.S. § 33-964(B). [18] 434 P.3d 1187, 1189-90 . Bankruptcy Judge Haines also pointed out in the case of In re 19 Rand, 400 B.R. 749 (Bkrtcy. D. Ariz. 2008), that under Arizona law, a recorded judgment 20 does not constitute a lien on a debtor’s properly claimed homestead property. Because 21 the judgment “is not a lien at all, it is not a lien that impairs the debtors’ homestead that 22 can be avoided pursuant to Code §522(f).” Id. at 755. 23 Based on the foregoing, 24 IT IS ORDERED denying Debtors’ Motion to Reopen. 25 IT IS FURTHER ORDERED denying Debtors’ Motion to Avoid Lien. The 1 the homestead property owned by the Debtors. Midland’s claim has been discharged in 2 Debtors’ bankruptcy proceedings. Should Midland refuse to voluntarily remove its 3 judgment from the Recorder’s records, the Debtors may seek relief in State Court under 4 A.R.S. § 33-420. 5 DATED AND SIGNED ABOVE. [7] 8 COPY of the foregoing mailed by the BNC to Interested Parties: [9] Sargon E. Awdisho [10] Marina I. Awdisho 11 8622 W. Paradise Dr. Peoria, AZ 85345 12 Debtors 13 Nicholas T. Van Vleet Neeley Law Firm, PLC [14] 2250 E. Germann Rd., Suite 11 15 Chandler, AZ 85286 Attorney for Debtors [16] Bursey and Associates, P.C. [17] 6740 N. Oracle Rd., #151 Tucson, AZ 85704 [18] 19 Midland Funding LLC c/o Corporation Service Company 20 8825 N. 23rd Ave., Suite 100 Phoenix, AZ 85021 [21] 22 Midland Funding c/o Midland Portfolio Savings Inc. 23 8875 Aero Dr., #200 San Diego, CA 92123 [24] Midland Funding [25] PO Box 939069